109th Congress / House / 2nd session / Vote 135
- Question: On Agreeing to the Conference Report
- Bill: H R 4297
- Vote description: Tax Relief Extension Reconciliation Act
- Vote type: Recorded Vote (Help)
- Result: Passed, 244-185, with 4 not voting.
- Date/time: May 10, 2006, 6:16 p.m.
- Republican majority opinion: Yes (Help)
- Democrat majority opinion: No (Help)
Key Vote Analysis
This bill extended the Bush administration's previously passed tax cuts on dividends and capital gains, and spared about 15 million middle-income Americans from the alternative minimum tax.
The Washington Post reported that "the tax agreement would cut revenue to the Treasury by $90 billion over the next five years, but other measures would raise about $21 billion -- for a net loss to the Treasury of about $69 billion."
Republican congressional leaders said the bill was essential to sustain economic growth, while Democrats and some Republicans argued the tax cuts would mainly benefit the wealthy and compound the nation's long-term deficit and debt problems. The budget deficit was expected to exceed $300 billion in 2006. Opponents said the government could not afford the loss of $69 billion in tax revenue over five years.
The Washington Post reported that "middle-income households would receive an average tax cut of $20 from the agreement, according to the joint Urban Institute-Brookings Institution Tax Policy Center, while 0.02 percent of households with incomes over $1 million would receive average tax cuts of $42,000."
Sen. Olympia Snowe (R-Maine), an opponent of the bill, said "the preponderance of these revenues will go to upper-income people, people who make a million dollars or more."
According to The Post, opponents said some of the "tax revenue raisers" would merely defer further loss of tax revenue to a later time. "One measure would allow upper-income savers with a traditional individual retirement account to pay taxes on the account's investment gains and then roll over some of the balance into a Roth IRA, where the money can be withdrawn tax-free upon retirement," The Post reported. "The provision would raise about $6.4 billion over 10 years, seemingly keeping the size of the tax-cutting package down. But over the next 35 years, it would cost the government $36 billion, according to the Urban Institute."
Supporters said the tax cuts would spur economic growth, which would reduce the deficit as businesses and individuals use tax savings to hire more workers, expand existing businesses and spend in the consumer economy. Supporters further argued that the previously passed cuts on dividend taxes and capital gains taxes were responsible for the rebound of the U.S. stock market and economy in the years since the 2001 recession. Treasury Secretary John Snow said "rarely has a piece of public policy been so effective, with the effects so evident and immediate."
Drafters of the tax package kept the net cuts over a five-year period below $70 billion. Under Senate budget rules, staying below the $70 billion threshold meant the tax-cut package could not be filibustered and could be passed by a simple majority. The bill passed the House on May 10, 2006. The Senate passed the measure on May 11. President Bush signed it into law on May 17.
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